The World

One rhetorical trope which never fails to irritate is the trite observation that “now is not the time for complacency”. Nods all round the room. I have often thought it would be provocative, for once, to hear a speaker say that today, indeed, is the perfect moment to be complacent, to relax one’s guard, and to engage in a comforting bout of self-congratulation.

I never thought that happy moment would arrive, but it did today in a session on risk, where three Anglo-American CEOs told us that their corporations had risk management all figured out. Capital is perfectly allocated to risk, and they were confident that systemic crises could be prevented in the future. So governments and regulators have to “move on” (a favourite Blairite phrase). In other words, all these dangerous ideas about resolution regimes or, horror of horrors, breaking up huge banks should be abandoned. Big banks can attract better risk managers. Small ones won’t have good chief risk officers.

In any event, regulators are “behind the game”, they don’t understand new products. They are focused on old risks not new ones. They ought to spend time in the firms they oversee or, better, regulators should be staffed by people on secondment from financial firms.

Your correspondent’s economy was on the verge of a Chinese-style episode of overheating when another panellist, with a marginally lower boiling point, went over the top. This discussion is taking place “on the moon”, he colourfully observed. The 10m additional unemployed workers in developed countries would be surprised to hear that all was for the best in the best of all possible worlds, and that the financial sector could now be left to its own devices in the confident belief that all the right lessons had been learnt and it could never happen again.

Of course this unhappy disagreement was all smoothed over by a skillful chair. In Davos you cannot find Monty Python’s “Room for an Argument”. All ended in seemly accord. But I have been humming an old Judi Pulver song  -“They’re dancing on the Moon”-  all day.